Plane Conversations

Until we can price all air transportation correctly, we will not be able to price any air transportation correctly.

Social Flights is the premier air transportation company that sells private jet service on a per seat basis.  This is important because there is no other way to compare the time-value of a private jet against the time-value of a commercial jet unless they are priced in the same manner.

Unfortunately, highly competitive markets determine the price of a seat on a commercial airline, not necessarily distance of the flight.  This does not make very much sense – for nearly any other product, you pay for how much you consume. If only commercial airlines were priced like private aircraft: by the mile.

Why does an airline ticket need to be 400 dollars 6 weeks prior to departure and 600 dollars 2 weeks prior to departure, except to maximize profit? Nothing else changes except as a proportion to distance traveled. But think of all the accountants, marketing personnel, and strategic planners constantly manipulating price inputs that have nothing to do with passenger satisfaction.

Every airline use essentially the same types of aircraft, they pay the same cost in fuel, and they have similar direct costs in labor, landing fees and gate contracts.  You would think that a 3000-mile trip would cost X amount more than a 1500-mile trip… all day long, for each and every airline.

This chart shows the actual fuel cost to carry a 200 lb payload 1750 miles between DFW and LAX for various types of commercial aircraft assuming jet fuel price is about 3 dollars per gallon (at the time that this industry study was published).

I did some back o’ the napkin calculations and concluded that a Lear 35 burns 5 times more fuel per 200 lb passenger than an MD-80.  A Phenom 300 is about half of that, or 2.5 times that of the MD-80.  The average would be around 3.3 times the commercial jet.

The Golden Ratio

This is a terribly difficult calculation to make so bear with my assumptions here.  But suppose all things being equal, we can say generally that a private aircraft cost is 3 -5 times greater than the commercial airplane while the door-to-door time is  1/3 – 1/5 the time of the commercial flight.  The factor of 3 – 5 (depending on the comparable averages) puts the cost of the traveler time in parity with the cost of the airline time.

Why does this matter?

Now, some honest comparative market analysis can take place by simply adding and subtracting time and money from both parts of the Golden Ratio to account for various attributes of the trip.  For example: shorter drive to smaller airports, no long lines, non-stop flights can be added or subtracted from the “time” part of the ratio.  Meanwhile; the cost of parking, airport taxes, cost of food, cost of lodging, and the cost of traveling to your final destination, etc., can be added or subtracted from the cost side of the ratio.

The Data will set us free

To liberate this information is to empower the traveler, the operators, the community and the hospitality industry to make rational decisions.  Communities can design rational incentives for tourism.  Corporations can make rational decisions for employee travel, and economic planners can make rational investments in intermodal transportation.

Google Search for the term "Jet Charter"

Google Think Insights is an amazing resource for looking at who is searching on certain terms, and from where.  This post shows two search categories and related terms from which we can draw several general ideas about private air travel.  These data demonstrates that an increasing amount of people are searching on terms such as private jet, jet charter, VIP travel, etc.

Another curious trend is the term “Jet Charter Cost” is also increasing significantly as people seek to find the value threshold for private air travel vs commercial air travel.

Recession or transition?

These data all refer to a date range between the dates of january 2008 and December 2011 corresponding to the greatest economic downturn in the US since the Depression.  There are likely many forces acting on the market including the pullout of commercial aviation from minor market, few travel alternatives,  increased usage of internet search technology, increased business travel needs, and upper class growth rates.

The increase in terms related to cost may suggest that even the most wealthy are becoming cost conscious, more people want to fly private, more businesses need to fly private in order to access their market, and more VIP travel is required.

It is not surprising that the term “business aviation” has a similar location density to the term “Jet Charter”.  This reinforces the suggestion that corporations increasingly need to send their executives on travel outings.

Social Flights is in the business of social organization too:

It is likely that wherever executives go, so too will managers and lower level employees.  Social Flights has long suggested that there is an opportunity to increase private charter shuttle service between key locations.  Likewise, there are opportunities for companies to share private aircraft scheduled to fly between regions.

Next we looked at the term “VIP Travel” and identified the following locations where the terms were searched.  We found a similar increase in VIP Travel related terms as we did for terms related to jet charter costs, except related to supporting services such as reservation, booking, schedules, and services.

This suggests that the door-to-door experience is underserved and that an air transportation service that is able to connect the dots would hold a true value advantage over one that just drops the passenger off at a hub airport.

Search terms are important because they indicate the intentions of a market.

While little is ever conclusive, the rate at which something changes can say more than the thing being observed alone.  At Social Flights, the demands of a dynamic market are clear.

1. Companies must have business travel options.

2. A door-to-door value proposition is essential.

3. People are searching online more than ever

4. The commercial airline industry leaves a market underserved.

Economic recessions have been shown to be more about technological transition and adjustment rather than any single underlying factor.  We believe that this transition will be no different.